By Alex McCuaig

City sells majority of its remaining oil production

Dec 21, 2020 | 9:11 PM

MEDICINE HAT, AB – The city took a big step in divesting its oil assets, voting to sell its stake in the Glauc C field representing more than 85 per cent of Medicine Hat’s remaining oil production during Monday’s council meeting.

The terms of the deal and buyer weren’t disclosed aside from the sale representing a $20 million net positive when both cash and costs of cleaning up the city’s portion of the field are taken into account.

The sale leaves the Manyberries field as the last remaining substantial oil asset remaining in the city’s portfolio.

“I don’t think it’s a big surprise,” said Mayor Ted Clugston. “I think we’ve been hinting that we’re getting out of the business. It’s moving a little bit more quickly than we had thought.”

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The city has gotten rid of three other fields in recent months and has reclaimed 1,300 wells this year as part of its plan to abandon 2,000.

The mayor said the way the industry is going, he’s pleased the city was able to secure the deal.

“We can look at this as sad and an end of an era or we can look at this as a good news story that we were able to get some value out of these and not have to pay the reclamation costs going forward,” said Clugston.

The chair of the city’s energy and utility committee, Phil Turnbull, said production at the city’s 27 per cent working interest in the Glauc C field, “has been going down, down, down.”

To the point, said Turnbull, that it was unlikely the city was going to see much in the way of return on investment from the asset.

“So the time has come. If you’re going to sell a project, you need to sell it before its actually losing a whole lot of money,” said Turnbull.

The deal is set to close sometime in January 2021.